VC forecast: sunny with a chance… | PitchBook News Summary

1. Key Themes

Theme 1: Private Markets Entering Their Best Return Environment in Years

PE and VC fund returns are flashing the strongest signals since the post-COVID rebound, driven by favorable public market conditions.

"Private equity's implied quarterly return of 4.9% in Q2 is the strongest it has been since the rebound following the 2020 downturn. Venture capital has also experienced one of its strongest return environments in recent years, with models suggesting a 5.5% return for the quarter."

"Public equities rallied in Q2 across the model's favored indexes, spanning growth, small-cap, and value equities, while market volatility declined and financial stress remained low. Those are precisely the conditions the model has historically associated with stronger returns, particularly for PE and VC."

Theme 2: Europe's Unicorn Herd at an All-Time High — and Still Growing

The European VC ecosystem is accumulating unicorns faster than it is graduating them via exits, with AI as the primary accelerant.

"Europe's unicorn herd is worth over €600 billion ($701 billion) — almost €100 billion more than their value at the end of last year — as dealmaking among the region's €1 billion-plus VC-backed companies rebounds."

"The addition of 18 new startups to the herd last quarter boosted the total, bringing the number of VC-backed companies worth over €1 billion to 175, the highest count to date."

"Few unicorns are exiting right now, so companies are piling up rather than graduating out. As AI takes a greater share of unicorn dealmaking, the herd is likely to keep growing for the rest of the year."

Theme 3: AI Becoming Standard Operating Infrastructure for PE Portfolio Companies

Major PE firms are now actively deploying AI tools across their portfolio companies, not just investing in AI — signaling a shift from thesis to execution.

"PE-backed companies are the guinea pigs in a massive AI experiment. Blackstone, Hellman & Friedman and Anthropic are targeting portfolio companies in the first wave of a $1.5 billion joint venture to transform businesses."

Theme 4: Anthropic's Imminent IPO Could Be a Historic Market Event

Anthropic's S-1 is expected imminently and could rival the largest private market offering in history.

"Will Anthropic top SpaceX's IPO price? Our research outlines what to watch for in Anthropic's S-1, which could drop as soon as the end of this month and rival SpaceX's record offering, according to Bloomberg."

Theme 5: Shein's IPO Saga Reveals How Geopolitics Can Destroy Private Market Valuations

Shein's tortured path to liquidity — blocked in the US, rejected in London, and now discounted 73% from peak in Hong Kong — is a cautionary tale about regulatory and geopolitical risk for cross-border consumer businesses.

"The company confidentially filed for an IPO in the US in November 2023 but faced scrutiny in Washington over its supply chain, ties to China and heavy reliance on the de minimis trade exemption. Shein subsequently turned to London, but the transaction failed to secure clearance from Chinese regulators."

"An IPO at the target would value the business roughly 73% below its peak."

2. Contrarian Perspectives

Perspective 1: Existing Shein Investors Are Being Asked to Re-Up Into the Same Asset They're Trying to Exit

The conventional assumption is that a company's IPO is the mechanism for early investors to get liquid. Shein is inverting this — asking existing investors to commit more capital as cornerstone investors in the very offering meant to give them distributions. This signals just how difficult it is to attract new outside capital at any reasonable price.

"Shein is asking some of its existing backers to invest in an IPO that's supposed to give them an exit. Boyu Capital and UBS Asset Management are in talks to become cornerstone investors... Shein has set aside at least $400 million of stock for cornerstone investors."

"Shein's repeated attempts to list have become a source of frustration for investors waiting for distributions, said one limited partner whose portfolio holds stakes in the company through several funds."

Perspective 2: The Unicorn Count Is a Misleading Indicator of European VC Health

A rising unicorn count sounds bullish, but the article reveals it's partly a symptom of dysfunction — companies that cannot exit are staying private longer and inflating the herd count. The pipeline of 174 "soonicorns" risks adding to an already-congested backlog.

"Few unicorns are exiting right now, so companies are piling up rather than graduating out."

"The report identified 174 startups, collectively valued at €127.8 billion, with the potential to surpass the €1 billion mark."

Perspective 3: Private Market Return Signals Are Leading Indicators, Not Confirmed Results

The encouraging Q2 PE/VC return data is model-implied, not reported — meaning the "sunny" headline could be revised once GPs begin marking their books.

"The real test will come when managers begin reporting their Q2 marks. Until then, the early read is encouraging."

3. Companies Identified

Anthropic

Description: AI safety and large language model company
Why mentioned: Expected to file its S-1 imminently, potentially rivaling SpaceX's record IPO; also partner in a $1.5B joint venture with Blackstone and Hellman & Friedman to deploy AI in PE portfolio companies
Quote: "Could drop as soon as the end of this month and rival SpaceX's record offering, according to Bloomberg."

Shein

Description: Chinese fast-fashion e-commerce retailer
Why mentioned: Case study in failed cross-border IPO attempts; now pursuing a discounted Hong Kong listing at 73% below peak valuation while asking existing backers to serve as cornerstone investors
Quote: "An IPO at the target would value the business roughly 73% below its peak."

Dexmal

Description: China-based humanoid robotics startup
Why mentioned: Seeking a $3 billion valuation in a new funding round; backed by Alibaba Group and NIO Capital
Quote: "Seeking a 20 billion yuan ($3 billion) valuation in a new funding round."

Rebellions

Description: South Korea-based AI chip company backed by Samsung Ventures
Why mentioned: Nvidia is in talks to pursue a collaboration, investment, or acquisition; valued at $2.3 billion
Quote: "Nvidia is in talks with South Korea-based AI chip company Rebellions... to pursue a collaboration, investment or acquisition."

Starcloud

Description: Developer of orbital data centers
Why mentioned: Raised $250M at a $2.3B valuation from Manhattan West — a notable bet on space-based computing infrastructure
Quote: "Starcloud, a developer of orbital data centers, raised a $250 million round led by Manhattan West at a $2.3 billion valuation."

FSH Technologies

Description: Government IT systems developer
Why mentioned: Raised a $20M Series A led by Lachy Groom and a $5M seed round led by Contrary — notable for receiving backing from high-signal early-stage investors
Quote: "FSH Technologies secured a $20 million Series A led by Lachy Groom and a $5 million seed round led by Contrary."

Steadfast Group

Description: Australia-listed insurance broker
Why mentioned: Subject of a A$7.7 billion ($5.52 billion) take-private acquisition led by KKR
Quote: "Agreed to a A$7.7 billion ($5.52 billion) take-private acquisition by a group led by KKR."

Cloverleaf Infrastructure

Description: Data center infrastructure company backed by NGP Energy Capital Management
Why mentioned: Received a minority investment from Nvidia — continuing Nvidia's strategy of investing directly in AI infrastructure companies
Quote: "Nvidia made a minority investment in NGP Energy Capital Management-backed data center infrastructure company Cloverleaf Infrastructure."

Allvue Systems

Description: Data and analytics provider for asset management
Why mentioned: Vista Equity Partners exploring a sale at a $3 billion valuation including debt
Quote: "Vista Equity Partners is exploring a sale of Allvue Systems... at a $3 billion valuation including debt."

Nscale

Description: AI infrastructure company backed by 8090 Industries
Why mentioned: Looking to raise up to $3 billion in a US IPO
Quote: "Nscale is looking to raise up to $3 billion in its US IPO."

Huel

Description: UK-based VC-backed meal supplement maker
Why mentioned: UK competition authority approved Danone's €1 billion acquisition — a notable VC exit
Quote: "The UK's competition watchdog approved Danone's €1 billion takeover of UK-based VC-backed meal supplement maker Huel."

Aldermore

Description: South African-owned UK challenger bank
Why mentioned: Subject of a bidding war, with CVC Capital Partners expected to join existing bidders
Quote: "CVC Capital Partners is expected to join the bidding war for South African-owned challenger bank Aldermore."

4. People Identified

Jacobie Fullerton

Description: Quantitative Research Analyst at PitchBook
Why mentioned: Author of the PE/VC return barometer analysis
Quote: Byline on "PE and VC funds may have just had their best quarter in years"

Leah Hodgson

Description: Deputy Editor, European Private Markets at PitchBook
Why mentioned: Author of the European unicorn herd analysis
Quote: Byline on "Europe's unicorn herd hits an all-time high"

Esther Luz

Description: Private Equity Reporter at PitchBook
Why mentioned: Author of the Shein IPO analysis
Quote: Byline on "Shein's PE backers may have to hold on a little longer"

Jason Satsky

Description: Former power and energy head at Bank of America
Why mentioned: Accused by the SEC of insider trading related to the 2022 take-private of South Jersey Industries by a JPMorgan-managed fund
Quote: "The SEC has accused Jason Satsky, the former power and energy head at Bank of America, of engaging in insider trading."

Lachy Groom

Description: Early-stage venture investor
Why mentioned: Led the $20M Series A for FSH Technologies, a government IT startup — notable signal of investor interest in govtech
Quote: "FSH Technologies secured a $20 million Series A led by Lachy Groom."

5. Operating Insights

Insight 1: Use Public Market Conditions as a Leading Indicator for Private Fund Marks

The PitchBook Return Barometer model demonstrates that public equity performance, volatility levels, and financial stress indicators are strongly correlated with PE and VC quarterly returns — before GPs officially report. Operators and LPs can use these public signals to anticipate portfolio mark movements and prepare for LP communications.

"Public equities rallied in Q2 across the model's favored indexes, spanning growth, small-cap, and value equities, while market volatility declined and financial stress remained low. Those are precisely the conditions the model has historically associated with stronger returns, particularly for PE and VC."

Insight 2: Founders Should Model Multiple Exit Venues Early and Stress-Test Regulatory Risk

Shein's IPO journey — rejected in three jurisdictions over three years with a 73% valuation haircut — underscores that founders with cross-border supply chains, regulatory exposure, or geopolitical sensitivity must model alternative exit paths and listing venues from an early stage, not reactively.

"The company confidentially filed for an IPO in the US in November 2023 but faced scrutiny in Washington over its supply chain, ties to China and heavy reliance on the de minimis trade exemption. Shein subsequently turned to London, but the transaction failed to secure clearance from Chinese regulators."

6. Overlooked Insights

Insight 1: Europe Has a €127.8 Billion "Soonicorn" Pipeline Ready to Enter the Unicorn Herd

While the record-high unicorn count dominates the headline, the more forward-looking data point is the 174 companies collectively valued at €127.8 billion sitting just below the €1 billion threshold. If exit markets remain constrained, these companies joining a herd that is already not graduating could significantly compound the liquidity overhang in European VC.

"The report identified 174 startups, collectively valued at €127.8 billion, with the potential to surpass the €1 billion mark."

Insight 2: Orbital Data Centers Are Attracting Institutional Capital at Scale

Starcloud's $250M raise at a $2.3B valuation for orbital (space-based) data centers received only a brief mention but represents a novel and potentially significant infrastructure investment category that sits at the intersection of space tech and AI compute demand — two of the hottest capital flows of the current cycle.

"Starcloud, a developer of orbital data centers, raised a $250 million round led by Manhattan West at a $2.3 billion valuation."